Q: Is the air really coming out of the housing market? Should I wait or go ahead and buy?

A: So should you wait to buy? Maybe. If nothing more is fueling the bidding wars in your neighborhood than fear and habit, then it makes sense to wait. Unless a big local employer leaves town, real-estate markets rarely change overnight. It usually takes several months for sellers to realize a market has shifted and to lower their prices, and for buyers to understand that they finally have choices and negotiating room. But if you know you are going to stay in the area for years, and will be able to ride out a cooling real-estate cycle, then keep shopping. Overall, house prices aren’t likely to plunge precipitously, even in overheated markets, most economists say. Mortgage interest rates could creep higher in the year ahead, though, eroding your buying power. Just remember to think of that home primarily as shelter, and not as an “investment.” That will help you keep your purchase in perspective, even when frantic buyers all around you are losing theirs.
Is the Party Really Over for Housing Boom? [WSJ]